The personal assets of Monroe L. Beachy, a 77-year-old Amish man, included a horse, buggy and harness. According to the Securities and Exchange Commission, his skills included financial fraud.

Beachy spent a quarter-century raising $33 million from more than 2,600 investors, the overwhelming majority of them fellow members of the Amish community, which often shuns modern conveniences such as automobiles.

But Beachy’s investment approach allegedly had more in common with the timeless methods of Charles Ponzi and Bernard Madoff than with the sheltered village of Sugarcreek, Ohio, where he lived. When the SEC charged him with fraud on Tuesday, it said he had lost nearly half of his investors’ money.

In a telephone call Wednesday, Beachy declined to comment in any detail, saying, “My attorney advised me not to discuss it with anyone.” When pressed, he added, “Of course it was not intentional.” Beachy’s lawyer did not return a call.

According to the SEC, Beachy started raising money as early as 1986. He assured investors that they were earning money from safe U.S. government securities, while enticing them with higher returns than they could get from banks.

In an echo of Madoff’s infamous Ponzi scheme, Beachy issued periodic statements to investors showing the funds purportedly available to them, including accrued interest, according to a court filing.

Starting with a 10th-grade education and some classes from H&R Block, the tax-preparation company, Beachy built up such trust that Amish parents encouraged their children to invest, too. The investors included a school cookbook fund, a school capital fund and a Mennonite church.

Along the way, Beachy became treasurer of the Amish Helping Fund, a nonprofit that takes in money from investors and makes real estate loans “in an effort to preserve the Amish way of life,” the group said in a court filing. Beachy put some money in the Amish Helping Fund, which entrusted him with an even larger sum of $2.6 million.

Bankruptcy’s revelations

It all collapsed in the middle of last year when Beachy filed for personal bankruptcy. It turned out that he had been running a Ponzi scheme, a bankruptcy trustee alleged, and that he had put the money into speculative investments such as stocks, mutual funds and junk bonds.

As early as July 1998, Beachy was insolvent, but he continued to solicit investments from new investors to repay earlier ones, the trustee said.

Though many Amish steer clear of modern technology, some of the money Beachy raised ended up in dot-coms, which crashed in 2000. In his bankruptcy testimony, he said that in hindsight, it was possible that he “should have . . . shut down at that point.” He said a broker made the dot-com investments without his permission, but he kept doing business with the broker.

In trying to reconstruct what happened, a bankruptcy trustee said that the records Beachy turned over were “mutilated as a result of the removal or destruction of discrete portions of the records dating to around the time of the initial insolvency.”

When members of the community learned of Beachy’s insolvency, “everybody sort of stopped in their tracks and was sort of shaken and taken aback,” because the news was so at odds with Amish tradition, said Emery E. Miller, a 51-year-old chicken and dairy farmer who invested with Beachy.

But the more Miller talked about it, the more it became clear that his dismay was not primarily over the loss of money or the allegation that Beachy cheated members of his community.

Miller worried about how the “Plain Community,” as the Amish call themselves, might be viewed by outsiders. And he lamented “that somehow the church community also failed in not realizing what actually [was] going on.”

“I’m not hurting for my money,” Miller said. “I’m hurting for the fact that . . . what we as a church are called to be, you know, has been tarnished.”

For some investors, the collapse of the alleged Ponzi scheme has brought hardship.

A 76-year-old widow from Pleasantville, Tenn., sent a handwritten letter to an ad hoc committee of Amish creditors, saying she had been working hard to make a living without taking any money from the government. “I was putting what I could spare in the Amish Bank of Monroe Beachy,” she wrote.

Members of the Amish community have responded by making charitable contributions for victims, and the Tennessee widow, who said she had invested $4,327.80 with Beachy, expressed thanks for a gift that was “ greatly needed.”

In another handwritten note, an investor from Baltic, Ohio, told the creditors’ group to use any money left in his account “for the people who need it desperately.”

Church vs. court

Much of the sour taste in Sugarcreek over the scandal has resulted because Beachy took the matter to bankruptcy court, contrary to religious precepts, instead of resolving it within the community.

In piles of form letters, investors have asked the court to let them address Beachy’s debts in their own way because “participation as a creditor is abhorrent to deeply held spiritual principles.”

The committee of creditors, whose leaders include Miller, the dairy farmer, has argued that forcing them to pursue claims through the court would be a violation of religious freedom.

Bankruptcy officials have argued that it would be unconstitutional to transfer the work of the court to Amish church leaders, noting that some of the investors, who came from 29 states, are not Amish.

The SEC allowed Beachy to settle its complaint without admitting or denying the allegations, and without paying a penalty. That was based on his financial condition, the agency said.

In a handout to investors last year, the Amish creditors group said, “Members of the Plain Community love and trust one another in all their relationships, without the fear and suspicion commonly exercised to protect ones self from being taken advantage of, financially or otherwise.”

If the SEC is correct, that might have been what Beachy was banking on.

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